According to Bain & Company’s research, investment in the Indian SaaS market increased by 20% last year compared to 2021 reaching an all-time high of $5.1 billion. Based on a survey released on Tuesday, Indian software-as-a-service (SaaS) firms are on track to control 8% of the global SaaS industry and generate $35 billion in annual recurring revenue (ARR) by 2027. As per the research, domestic SaaS companies will increase by 20–25% annually.
Investment in SaaS in India increased by 20% last year over 2021, reaching a record-breaking $5.1 billion. This was caused by a rise in interest in earlier-stage deals which saw a considerable increase in the number of seed deals that have doubled in size over the past three years and a rise in the number of Series A investments when compared to 2021.
Arpan Sheth who is a partner at Bain & Company and head of the Private Equity and Alternative Investor practice in India. He said, “This ecosystem is being driven by a flywheel comprised of SaaS companies that are successfully executing on their global ambitions and an investor base that believes in the potential of Indian SaaS.” According to Sheth, “We are now witnessing the birth of a set of Indian SaaS firms who have a right to triumph not just in India but internationally.”
The future trajectory of Indian SaaS enterprises is still positive as their total annual recurring revenue of $12–13 billion in 2022 represents an increase of four times over the previous five years. According to the report, 14 of the 1,600 Indian SaaS startups that have received funding over the past five years have an annual revenue (ARR) of $100 million or more (compared to 1-2 five years ago) and are growing at the same rate as their US counterparts.
The first three quarters of 2022 saw a 10% increase in Indian SaaS venture capital (VC) investments compared to the same period in 2021. 90% of Indian SaaS investors anticipate maintaining or increasing their capital allocation to SaaS over the course of the upcoming year, indicating that the outlook for SaaS investment in India is still largely positive.
Prabhav Kashyap, the Partner at Bain & Company and co-author of the report stated that “almost 70% of Indian SaaS investors aim to increase their investment in the industry.”
From the survey report the majority of enterprise software decision-makers intend to increase their software expenditures in 2023, indicating that buyer attitudes toward SaaS will continue to be generally positive in the future.